The Corporate Monitoring Newsletter

Issue #20 - December 2004

Written by Mark Latham

IN THIS ISSUE:

1. “Turbo Democracy”: New Paper and New Priorities

2. Proxy Advisor Proposal Submitted to Metro One

3. British Columbia Shows How to Reform Politics
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1. “TURBO DEMOCRACY”: NEW PAPER AND NEW PRIORITIES

I recently completed the first draft of a working paper entitled
“Turbo Democracy: Voting to Improve Voter Information”, available at
www.corpmon.com/publications.htm . It applies my corporate
governance ideas to civic politics. The proposal for hiring a proxy
advisor selected by shareowner vote and paid with corporate funds
becomes, in the civic context, a proposal for public funding of news
media. I compare this with other proposals in the media reform and
campaign finance reform literatures.

“Turbo Democracy” marks a fundamental shift in the Corporate
Monitoring Project’s priorities. Whereas I had thought that the
innovation of collectively funded infomediaries would happen first
in corporations and then spread to civic politics, I now believe the
reverse. Opportunities for a first implementation seem more
attractive in civic democracies. This is because of the wide range
of small to medium-sized democratic organizations -- university
student associations, coops, homeowners’ associations, unions,
nonprofit groups, municipalities etc.

The paper outlines an agenda for creating “election consulting
groups” at universities, which would build their reputations in
campus politics before expanding to serve voters off-campus as well.
While I plan to pitch these ideas to democratic groups at
universities and elsewhere, I will also continue the Corporate
Monitoring Project’s established initiatives: submitting shareowner
proposals for empowering investor voters, and advocating creation of
a website to let individuals vote their shares by conveniently
copying institutional decisions.
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2. PROXY ADVISOR PROPOSAL SUBMITTED TO METRO ONE

The Corporate Monitoring Project has just submitted the “Proxy
Advisor” proposal to Metro One Telecommunications, for inclusion in
its year-2005 proxy voting form. If implemented, it would let
shareowners vote to choose a proxy advisory firm paid with company
funds. The same proposal was supported by over 20% of shareowners
voting on Oregon Steel’s proxy in April 2004.

The main goal is to reduce the shareowners’ free-rider problem,
which greatly restricts willingness to pay for better voting advice.
The economic incentives for paying as a group are much stronger than
for paying one investor at a time, since even large institutions
rarely own more than 5% of a company’s stock. The proposal would
increase funding for voting advice by such organizations as
Institutional Shareholder Services (www.issproxy.com), and encourage
competition from new entrants such as Glass Lewis
(www.glasslewis.com) and Proxy Governance (www.proxygovernance.com).
Unlike the prevailing business model, new entrants could earn fees
on a company-by-company basis, without covering thousands of
companies, and the advice would be available to all shareowners.

See www.corpmon.com for text of proposal, supporting statement and
further info.
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3. BRITISH COLUMBIA SHOWS HOW TO REFORM POLITICS

The British Columbia Citizens’ Assembly is showing the world how to
achieve political system reform. In a historically unprecedented
process, this randomly selected group of 160 citizens is now
completing its year of study and consultation by recommending that
the province adopt the “Single Transferable Vote” (STV) system for
electing legislative assembly representatives. Voters will decide
whether to accept this recommendation in a May 2005 referendum.

As a public observer attending many of the assembly’s sessions, I
have been impressed with how intelligent and conscientious the
members are. A broad and reasonably unbiased education process,
followed by public hearings throughout the province, prepared them
to make a balanced decision. The STV system would give more
proportional representation to multiple political parties than the
current “First Past the Post” system, as well as shifting some power
from parties to voters. More at www.citizensassembly.bc.ca .

This progress is closely watched by political reformers
internationally, for example the (USA) Center for Voting and
Democracy at www.fairvote.org . B.C.’s pioneering success has
already inspired a similar initiative in Ontario. The same basic
issues are at stake in all democracies, so we can look forward to a
global reform movement.

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